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Begley v Damesfield & Ors [2021] IECA 78 (19 March 2021)
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[2021] IECA 78
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1
THE COURT OF APPEAL
[Record No. 2018/168]
Donnelly J.
Faherty J.
Ní Raifeartaigh J.
BETWEEN:
MICHAEL BEGLEY
Respondent
AND
DAMESFIELD LIMITED
AND
JOHN LALLY
Appellant
AND
THE JOLLY M MANAGEMENT COMPANY LIMITED
JUDGMENT of the Court delivered on the 19
th
day of March 2021
A. Background
1.
This Court gave judgment in the matter on the 26
th
of June 2020 last. The trial judge
had found that there was a breach of a collateral contract by the appellant. The
appellant appealed and submitted, inter alia, that the trial judge erred in finding the
appellant bound by such a collateral contract and that a claim for breach of collateral
contract was not adequately pleaded by the respondent against the appellant.
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2.
In disposing of the submissions made, the Court made the following two relevant
findings:-
(a)
At paras. 65 and 66, the Court held that there was sufficiently cogent evidence
before the trial judge to support her finding that a collateral contract existed
between the respondent Mr. Begley and the appellant Mr. Lally;
(b)
At para. 99, the Court found that the High Court had no jurisdiction to reach a
finding as to the existence of a collateral contract in circumstances where no
such claim had been advanced by the plaintiff and consequentially there had
been no opportunity for the appellant to address the issue of a collateral contract,
in particular by way of legal submissions.
3.
Pursuant to those findings the Court decided to allow the appeal. The Court adjourned
the matter to permit two further issues to be considered in advance of any final order
being made. Written and oral submissions were made in respect of the following:-
(a)
Whether the matter should be remitted to the High Court pursuant to the
provisions of Order 86A Rule 3(1) of the RSC; and
(b)
What orders should be made by the Court in respect of the costs of the appeal
and the costs of the action in the High Court.
B. Remittal
4.
Order 86A Rule 3(1) of the Rules of the Superior Courts provides as follows:-
"Following the hearing of an appeal, the Court of Appeal may remit proceedings
to the High Court with such directions as it considers just."
5.
The appellant submitted that no order for remittal should be made. Although he raised
a number of grounds in his written submissions, he distilled his points of objection to
two distinct grounds:-
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(a)
The appellant cannot now be guaranteed a fair re-trial of the issue of the
collateral contract when this Court, according to his submission, has already
made a finding that there was sufficient evidence before the High Court to
conclude that a collateral contract existed between the parties to the appeal;
(b)
The respondent should not be permitted at this remove to amend his Statement
of Claim where it would require new facts to be alleged and a new plea to be
advanced and where the claim arising on foot thereof would otherwise be
statute-barred.
6.
By the time of the oral hearing on the issue of remittal, the parties were in agreement
that the decision of the Supreme Court in MacDonncha v. Minister for Education
[2018] IESC 50, was the relevant authority on the issue of remittal to the High Court
when an appeal is allowed against a judgment given on the basis of a point neither
pleaded nor raised during the hearing. In that case the single issue was remitted so that
it could be dealt with before a different judge.
7.
The decision in MacDonncha is authority for the proposition that even where a
judgment is given on a point neither pleaded nor raised during the hearing the matter
may be remitted to the High Court in appropriate circumstances. MacDonncha
concerned judicial review proceedings for which the Rules make plain that an
applicant's case must be pleaded clearly and explicitly. The applicant succeeded in the
High Court on a point that was not specifically pleaded and was not considered at the
hearing in specific terms. The judge had held the matter was ultra vires and although
vires had been alluded to in argument on a number of occasions, the explicit point as
determined by the judge was not raised at the High Court hearing.
8.
The Supreme Court held this was not a matter of mischance which had led to a
departure from fairness. The Supreme Court ruled as follows:-
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"28. In circumstances such as these, the Court must balance the rights of the parties.
There is here a simple concept of audi alteram partem and fair procedures. Under
the Rules of the Superior Courts, and as a matter of fair procedure a party must be
entitled to know the precise case that is being pleaded against them. But, bearing
in mind the elapse of time and other considerations, it would be unfair if the case
were now to be determined by this Court simply on the basis of some procedural
deficiency or a pleading point, which had not been raised in the High Court and
had not been properly addressed by either side. This is a question of striking the
right balance in fairness and outcome.
The Order
29. The order of the Court will refer to the second applicant only. No order can be
made in relation to the first applicant at this time, and until the proceeding is
reconstituted. In the circumstances, the Court will order that the judgment and order
of the High Court, with regard to the second applicant, be set aside on the `third
issue', that is, the finding that the Minister acted ultra vires s.15(6) of the 2001 Act.
As a matter of fair procedure, it is necessary that this single issue be reheard in the
High Court before a different judge. Accordingly, this sole question of vires will
be remitted back to the High Court for re-argument.
30. It will be necessary to file an amended statement of grounds pleading this one
specific issue of vires explicitly, but no other issue. The respondent Minister will
be permitted to file a new statement of grounds of opposition in order to deal with
that question, but no other question. No other issue may be revisited or reopened.
The Court will allow four weeks for the filing of an amended statement of grounds
for this purpose, and four weeks for the filing of the statement of grounds of
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opposition. Such further or other matters as may be necessary for doing justice in
this case should be dealt with by the High Court."
9.
It is appropriate to point out that in relation to pleadings generally, the Rules of the
Superior Court provide at Order 28 rule 1 that:-
"The court may, at any stage of the proceedings, allow either party to alter or amend
his indorsement or pleadings in such manner and on such terms as may be just, and
all such amendments shall be made as may be necessary for the purpose of
determining the real questions in controversy between the parties."
10.
The MacDonncha decision was relied on by the Court of Appeal in English v.
O'Driscoll & Ors. [2019] IECA 153, when allowing an appeal against the finding of a
trial judge based on an issue not pleaded and raised only after the evidence in the case
had concluded and remitting to the High Court for a retrial.
11.
The appellant submits that there should be no remittal on two grounds:-
(a)
That it would be unfair where the High Court would not be able to consider
the issue of collateral contract afresh and without constraint in light of the
finding of this Court; and
(b)
That the pleadings would have to be amended thereby requiring new facts to
be alleged and such a claim would be statute barred.
D. The First Ground
12.
The appellant submits that this Court's finding that there was sufficiently cogent
evidence of the collateral contract before the High Court would mean that another High
Court judge dealing with the matter would be constrained to consider that issue
deferentially. The appellant submits that there should not be a remittal in those
circumstances. The appellant submitted that in MacDonncha the Supreme Court was
careful not to give any view on whether the point would succeed.
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13.
This Court considers that the appellant cannot succeed on this particular objection to
remittal. In the first place, as the respondent has pointed out, the Court's finding was
not one that the High Court judge was obliged to find a collateral contract, rather it was
a finding that there was sufficient evidence to permit her to make such a finding.
Indeed, at para. 100 of the judgment, Donnelly J. explicitly stated that "[i]t is important
not to confuse a finding by an appellate court that there was evidence upon which the
trial judge was entitled find as she did, with a finding that a trial judge was obliged to
make the particular finding she did on the evidence before her." (Emphasis in original).
14.
Secondly, the High Court judge who will hear the appeal will be bound by his or her
oath to apply the law to the evidence given in the trial. The High Court judge is
perfectly capable and obliged to make the appropriate decision based upon the law as
applied to the evidence. The High Court judge must only apply the law as found by
the Court of Appeal (or Supreme Court) and must not surrender its decision-making
functions simply because of a view of the facts that may have been expressed by
another judge or judges, even if those judges are from an appellate court. It also bears
repeating here that there is a distinction between fact-finding at first instance and
appellate review of a trial judge's fact-finding.
15.
It is also relevant to point out that the issue at stake in the substantive appeal was such
that if the appellant succeeded in establishing that there was no sufficiently cogent and
clear evidence before the High Court to establish a collateral contract, there would
have been no remittal. This was the position in the case of Reynolds v. Blanchfield
[2016] 2 I.R. 268 where no claim for relief on a quantum meruit basis had been pleaded
and the Supreme Court held that there was no evidence before the High Court on which
the value of the quantum meruit could be properly assessed. The Supreme Court
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(Laffoy J.) rejected the argument that the appropriate order would be for the Court to
remit for the High Court to have the value assessed, stating:-
"The lack of relevant evidence in the High Court is attributable to the fact that the
Respondent's claim was not pleaded as a claim for relief on a quantum meruit basis.
Therefore, it would not be appropriate to remit the matter to the High Court."
16.
It follows that the question of remittal will only arise in cases where there is evidence
supportive of the claim that was not pleaded. In circumstances where a finding of the
Court on the central issue under appeal would have disposed of the appeal, it was
appropriate for the Court to rule on the sufficiency of evidence point, while making
clear that it was so ruling as an appellate court. This Court is satisfied that there the
first ground put forward does not prevent this Court for ordering that the case is
remitted to the High Court.
E. The Second Ground
17.
The appellant submits that a remittal could only take place if the Court permitted the
respondent to amend his pleading. The appellant submits that any attempt at this
remove to amend the statement of claim so as to include a claim that a collateral
contract came into existence in 2007 would in effect be to allow a claim, which is in
reality statute-barred, to proceed.
18.
The appellant relied upon this Court's comment in its judgment that the statement of
claim expressly stated that the reason the appellant was sued was because the common
areas of the development had not yet been transferred into the ownership of the
management company. The appellant submits that not only is there no plea in relation
to the existence of a collateral contract in the Statement of Claim, but there is no
allegation of fact that would support such a plea either.
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19.
The appellant relied upon the decision in Smyth v. Tunney [2009] 3 IR 322 in
submitting that the authorities are clear that an amendment to pleadings will not be
allowed where its purpose is to introduce a new claim based on a new factual matrix
that would otherwise be statute-barred. In Smyth Finnegan J. stated as follows (at
paragraph 39):-
"In summary the law as to amendment now is that an amendment will be allowed
if it is necessary for the purposes of determining the real issues in controversy
between the parties. The addition of a new cause of action by amendment will be
permitted notwithstanding that by the date of amendment the Statute of Limitations
had run if the facts pleaded are sufficient to support the new cause of action. Facts
may be added by amendment if they serve only to clarify the original claim but not
if they are new facts. Simple errors such as an error in date or an error as to location
which do not prejudice the defendant and enable the real questions in controversy
between the parties to be determined will be permitted [...] The amendment sought
here by way of the addition of causes of action does not satisfy these requirements.
In order to sustain the new causes of action additional facts are required to be
pleaded and indeed the notice of motion sought amendment of the statement of
claim by the addition of the necessary pleadings of fact. These amendments should
be disallowed." [Emphasis added]
20.
The respondent submits that this issue of the collateral contract was not based on an
entirely new set of facts; a factual matrix involving all these matters had been pleaded.
Further, an amendment of the pleadings would not give rise to a Statute of Limitations
point.
21.
In the view of this Court, the decision of the Supreme Court in Moorehouse v.
Governor of Wheatfield Prison & Ors. [2015] IESC 21 is relevant in understanding the
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decision in Smyth. It is worth quoting at length from the Supreme Court's conclusions
starting at para. 40:-
"Counsel for the respondent placed considerable reliance on the judgment of this
misplaced. In Smyth this Court considered and approved the judgment of the High
In turn, in Krops, Keane J., then a High Court judge, pointed out that the difficulties
which had arisen in considering amendments arose from an `over-rigid' application
amendment would not be permitted if it would deprive the defendant of a defence
under the statute of limitations. Keane J. observed that, where a plaintiff sought to
add a new cause of action arising out of the same facts, or substantially the same
facts, there was no reason why a court, even in the absence of a specific rule, should
be precluded from permitting such an amendment. In Smyth v. Tunney, having
referred with approval to Krops v. Irish Forestry Board Limited, Finnegan J. went
on to point out that Order 28, Rule 1 had also been considered by this Court
in Croke v. Waterford Crystal Limited & Irish Pensions Trust Limited [2005] 2 I.R.
383. This authority establishes that the first matter to be considered in an
application to amend is whether the amendment sought is necessary for
determining the real question in controversy in the litigation. The next issue to be
considered is whether the amendment can be made without prejudice to the other
party. A third criterion is whether any possible prejudice can be addressed or
regulated by a suitable order as to costs. Finally, a very late application to amend
is less likely to succeed, particularly if the amendment is on a purely technical
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point. There are, of course, non-exclusive general statements of principle to be
applied on the facts of a given case.
[The Supreme Court then recited the quote from Finnegan J. set out above]
In Smyth v. Tunney the amendments sought did not satisfy the requirements
because the applicant both sought to add causes of action to the statement of
claim and to plead a very substantial range of additional facts.
This is not the situation here. No effort is made to plead a large range of new facts.
This application does not concern an endeavour to plead a new cause of action.
What is in question here is purely the addition of facts, by amendment, to "clarify
the original claim" (see paragraph 30 of Smyth v. Tunney)".
22.
Quirke J. in Lismore Homes Ltd v. Bank of Ireland Finance Ltd. [2006] IEHC 212
stated as follows:-
"The fact that the amendment sought will deprive the opposite party of a
defence pursuant to the provisions of the Statute of Limitations will not, of itself,
necessarily be fatal to the application. However it is a factor which may be taken
into account by the court in considering whether or not the amendment should
be permitted [...] The court has jurisdiction to permit an amendment which is
required in order to plead a cause of action which can be readily identified from
the facts already pleaded. It may do so even if the amendment includes a cause
of action which would otherwise be barred by the Statute of Limitations.
However, an amendment should be permitted only where no injustice will be
caused to the opposite party."
23.
In Delaney & McGrath, at para. 5-235 it is stated, regarding Lismore Homes, that
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"Although this line of authority was not considered, it is consistent with the approach
adopted by the Supreme Court in Smyth v. Tunney". This Court considers that this
statement regarding Lismore Homes is also consistent with the view of Smyth v. Tunney
as set out by the Supreme Court in Moorehouse. Each case is to be decided on its own
facts.
24.
There is no question here but that the real issue in controversy between the parties is
whether there was a collateral contract between them. As demonstrated in
MacDonncha and the other cases cited above, an amendment may be permitted on
remittal from an appellate court if the purpose is to allow the real controversy between
the parties to be litigated fairly between the parties. The amendment will be permitted
notwithstanding that by the date of amendment the Statue of Limitations had run, if
the facts already pleaded are sufficient to support the new cause of action identifiable
from the said facts or the facts are substantially the same. The amendment will not
be permitted where it is sought to plead a new cause of action and there is an attempt
to plead a substantial range of additional facts (as in Smyth v. Tunney). In Moorehouse
it was clarified that Smyth v. Tunney had approved of the decision in Krops to the effect
that where the action arose out of the same facts, or substantially the same facts, there
was no reason why a court in the absence of a specific rule should be precluded from
permitting such an amendment.
25.
It seems to this Court that the case law on permitting amendments has evolved over
time and that in general amendments to pleadings should be allowed where necessary
for determining the real issues in controversy between the parties. It is worth noting
that the present case presents a different set of circumstances than in Smyth v. Tunney
or Moorehouse v. The Governor of Wheatfield. In those cases, the terms of the
proposed amendment were before the appellate court. Furthermore, the court at first
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instance, and then on appeal, was in a position to adjudicate on whether the precise
amendment of necessity raised additional facts. In the present case, the respondent has
urged the Court to accept that an amendment can be made to add the cause of action
on substantially the same facts as already made.
26.
This Court must bear in mind that it is an appellate court and that primarily the issue
is whether the amendment is necessary for the determination of the real issues between
the parties and can be made without injustice. Undoubtedly the amendment is
necessary to determine the real issue between the parties. If the amendment can be
made on substantially the same facts as already before the Court then there is no
injustice. The respondent urges the Court that he comes within this requirement. The
facts he submits were substantially the same, and indeed the evidence was given and
the trial proceeded on the basis of the facts.
27.
This Court has concluded that the interests of justice require the remittal to the High
Court, but on a particular basis, as described below. It rules in favour of remittal for
the following reasons. First, the question of whether there was a collateral contract,
and a breach of it, is the real issue of controversy between these parties. The appellant
has placed a particular emphasis upon the pleading at para. 9 of the Statement of Claim
that the plaintiff did not know if the transfer had happened and it was for that reason
alone that the appellant was joined. This Court considers that this plea cannot be taken
in isolation as a reason not to remit the matter. It is the facts pleaded as a whole in the
statement of claim that must be substantially the same in order that the removal of the
opportunity to plead Statute of Limitations will not give rise to an injustice. The Court
notes that claims of breach of contract, breach of covenant and nuisance were made
against the appellant at various points in the Statement of Claim.
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28.
Secondly, the appellant's main claim of prejudice was that this Court had given its
opinion that there was sufficient evidence to establish a collateral contract; but that
argument has been rejected above. Thirdly, the appellant in written submissions
claimed that to remit would be a breach of requirement for finality in proceedings.
That point is rejected as inconsistent with the views expressed in MacDonncha.
29.
For the reasons set out above, the Court had adjudged it just to remit the matter to the
High Court, admittedly without the precise details of the amendment to the pleadings
the respondent proposes being before the Court. We are mindful, however, that even
if the amendment were before the Court and the Court were to rule on it, the Court
would be making what would essentially be a first instance decision without the
possibility of an appeal. While this might be appropriate in some cases, especially if
the issue was a very simple one, the Court considers that the most just way of
proceeding with this case is to remit the matter to the High Court, permit the respondent
to amend his pleadings to include a plea of breach of collateral contract and permit the
appellant, should he so chose, to plead the Statute of Limitations. Any issue of whether
this is an entirely new claim or one which arises from the facts or substantially the
same facts as pleaded, can then be decided by the High Court as a preliminary issue or
at trial as the High Court (at the motion of one or both parties) sees fit.
F. Costs
30.
There are two aspects to the issue of costs:-
(i)
The costs of the appeal; and
(ii)
The costs of the High Court hearing.
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(i) The Appeal Costs
31.
The appellant seeks his costs in line with O. 99 rr. 1 and 4 of the Rules of the Superior
Courts. He submits that costs follow the event. The respondent relies upon the relevant
provisions of the Legal Services Regulations Act, 2015. The later provisions have
been addressed by this Court in Chubb European Group SC v. The Health Insurance
Authority [2020] IECA 183. Neither side submitted that there was any reason to argue
for the pre-2015 situation to apply to this issue.
32.
The appellant succeeded in his appeal insofar as the Court has found that the trial judge
should not have ruled on a claim which was not before her. He has not succeeded in
resisting remittal. In so far as he succeeded in the appeal, that would be considered
the "event" under the pre-2105 and there would be a presumption in favour of granting
costs. The 2015 Act states that a party who is entirely successful is entitled to their
costs unless the court orders otherwise. As Murray J. observed in Chubb:-
"Given that the law was that the term `event' fell to be construed distributively so
that there could be a number of events in a single case (Kennedy v. Healy), winning
the `event' and being `entirely successful' may well not mean the same thing
(although it will be observed that the phrase `costs to follow the event' appears in
the marginal note to, but not the text of, s.169)."
33.
The respondent has argued that the appellant spent the majority of his written and oral
submissions on a point that was rejected by this Court; that there was no evidence to
support a finding of collateral contract. Although the appellant won on the second
point, namely that he had not been given a full and fair opportunity to make
submissions on whether there was a collateral contract, the respondent argues there
should be no order as to the costs of the appeal. The respondent also relied upon the
point that he had not contributed to the finding of the trial judge.
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34.
We do not consider that we have to make a finding as to whether there is a difference
between "costs follow the event" and a party who is "entirely successful" being entitled
to costs. This is because pursuant to s. 168 (1) and (2) the Court is entitled to make an
order for costs at any stage in proceedings and in particular relating to particular steps
in proceedings or where someone is partially successful. In this case, the appellant has
won the appeal in so far as he has successfully overturned the finding of breach of
collateral contract and the award of damages made against him. While the majority of
the argument concerned an item on which the Court held against him, it was, as
indicated above, a necessary part of the consideration of the appeal. Importantly, it did
not add to the costs. The fact that a remittal is to be made does not affect the fact that
he has succeeded in the event. Furthermore, we do not think it relevant that the
decision was made by the trial judge without submissions on the point. If there was
merit in that point it would only have been if the respondent had indicated at the earliest
stage that he was not going to oppose the appeal.
35.
Therefore, we are of the view that the appellant should succeed in being awarded the
costs of the appeal. We have considered whether this should include the additional
costs of the written and oral submissions in relation to the remittal and costs and we
conclude that it does so. This was a necessary part of the overall determination of the
appeal in the slightly unusual circumstances of this case. It is appropriate that the
appellant is entitled to the costs thereof.
(ii) The High Court Costs
36.
The respondent submits that this should be left over to the High Court to determine.
At the oral hearing the appellant appeared to accept that to be the position should the
Court decide to remit the matter. On further query from the Court he clarified that he
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was seeking his costs, or at least part of them, as he had won so comprehensively on
most of the claims of the respondent.
37.
We consider that the general rule "in actions for damages where a retrial has been
ordered is that costs follow the event in relation to both trials, and the question of the
costs of the first trial are dependent on the outcome of the retrial" as identified in MK
Court of Appeal (Collins J.) has recently stated McDonald v. Conroy & Ors. [2020]
IECA 336 at para. 34: "The rationale for such a rule appears reasonably clear. The
ultimate winner in litigation should recover their costs, including the costs of any
previous trial, because the ultimate outcome establishes that that party was entitled to
succeed all along. That is so whether that party succeeded in the first trial or not."
38.
There is no reason here to disapply that general rule. It may well be that if the
respondent is successful, he may not be entitled to all his costs on the basis that he has
not been "entirely successful" but that will be a matter for the High Court to determine.
It is not necessary or appropriate in the present case, that this Court should parse and
analyse the time spent at trial on each aspect of the claim. When the High Court has
heard and determined the matter, it will be in a better position to address the issue from
the knowledge it gains in hearing the evidence in the proceedings.
39.
The Court will therefore reserve the issue of the High Court costs for determination by
the High Court at the conclusion of those proceedings.
G. Conclusion
40.
In light of the above this Court will make the following Orders:-
(a)
Allow the appeal;
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(b)
Remit the proceedings to the High Court for the purpose of determining the issue
of whether there was a collateral contract between the appellant and respondent
and whether the appellant was in breach of same, subject to (c);
(c)
Permit the respondent to amend his statement of claim to plead the breach of a
collateral contract and to permit the appellant to make amendment to his defence
as he sees fit in light of the amended plea;
(d)
Make an order for the costs of the appeal to be made in favour of the appellant; and
(e)
Reserve the issue of the costs of the first trial in the High Court for determination
by the High Court at the conclusion of the High Court proceedings.
41.
The issue of a stay was not addressed by the parties. It is the view of the Court that
there should be a stay of execution on the award of costs until the determination of the
proceedings.
